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Dementia is a long‐term and progressive syndrome that not only influences the person with dementia (PWD) but also the caregiver. However, informal caregivers are not always empathic and understand the symptoms of dementia, leading to destructive caregiving relationships and poor quality of caregiving. VR‐based simulation interventions can provide a more realistic and memorable learning experience for caregivers to walk in PWDs' shoes. This review aimed to provide practitioners and researchers with insights on developing and/or adopting an effective VR‐based simulation intervention for enhancing the empathy of informal caregivers of PWD. A mixed‐methods systematic review was conducted. Quantitative, qualitative, and mixed‐methods studies were searched from MEDLINE, PsycINFO, CINAHL, Scopus, Embase, and Cochrane Library updating. Standard JBI critical appraisal instruments were used for the quality appraisal. A convergent segregated approach was used to synthesize and integrate the data. A total of seven studies were included. Inconsistent quantitative results were reported on the effects of VR‐based simulation on empathy enhancement. Significant effects were reported on knowledge of dementia and emotion‐focused coping strategies. Two themes were generated from the qualitative studies, including "Informal caregivers gained better insight into problems encountered by older people with dementia" and "Thinking from the perspective of older people with dementia, leading to changes in attitudes and behaviours towards dementia". The qualitative synthesized evidence showed that informal caregivers gained better insight into problems encountered by PWD, but the quantitative synthesized results are inconsistent. Yet, informal caregivers experienced a change in attitude by thinking from the perspective of PWD. [ABSTRACT FROM AUTHOR]